Dell, AMD Executives Charged With Insider Trading

Executives from Dell, AMD, Flextronics and Taiwan Semiconductor Manufacturing have all been arrested within a week on charges of insider trading.

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Executives from Dell, Advanced Micro Devices (AMD), Flextronics and Taiwan Semiconductor Manufacturing have all been arrested within a week's time on charges of insider trading.

All the cases have one thing in common: the technology executives were solicited by an expert network called Primary Global Research (PGR), and paid to give industry insights to PGR's clientele, investors, over the phone. Because of the incentives involved, expert networks are extremely controversial and often scrutinized by the FBI.

"The information trafficked by the four 'consultants' went way beyond permissible market research; it was insider information," said FBI Assistant Director-in-Charge Janice Fedarcyk in a statement. "The more than $400,000 the firm paid the four 'consultants,' merely to participate in phone calls with firm clients, is an indication of the value placed on the information. This wasn't market research. What the defendants did was purchase and sell insider information. Our investigation is most assuredly continuing."

Former AMD supply chain manager Mark Anthony Longoria, 44, allegedly pocketed $200,000 over two years for leaking confidential information such as "AMD revenue information, average sales prices, product sales figures, and gross margin information" to investors, the FBI said. His case appears to stem from last year's probe into former AMD chairman, Hector Ruiz, who resigned after being charged of leaking insider information to Galleon Group, an investigation that began in 2009.

According to AMD spokesman Mike Silverman, Longoria resigned in October. He started working with AMD in January 2007 and was based out of Round Rock, Texas.

"AMD has been cooperating with the U.S. attorney's office and will continue to do so. AMD has a clear and comprehensive policy regarding insider trading and a worldwide insider trading training program," Silverman said in a statement.

Last Friday, Dell global supply manager Daniel Devore plead guilty to leaking secrets about Dell and its suppliers to investors, some from hedge funds, the FBI said. Devore was paid $145,750 from late 2007 to August 2010 for his "advice."

Flextronics senior director of business development Walter Shimoon, 39, was arrested for leaking insider information about one of his clients, Apple, the FBI said. At the time, Flextronics supplied camera and charger components for Apple iPhones and iPods, and was privy to Apple's sales forecasts and unreleased products, it said. (The FBI's complaint lists the iPad as an example). During his employment, Shimoon was paid $22,000 for his insights into unreleased iPhone products.

Lastly Manosha Karunatilaka, 37, an account manager at Taiwan Semiconductor Manufacturing Company (TMSC), was arrested for disclosing TSMC's product sales figures and shipping information. He made more than $35,000 over 2.5 years, the FBI said.

On PGR's part, sales VP James Fleishman was arrested Thursday for orchestrating the calls between the above tech professionals and his own investor clients, according to the FBI.

Sara Yin is a junior analyst in the Software, Internet, and Networking group at PCmag.com, pouring most of her energy into app testing and security matters at Security Watch with Neil Rubenking. She lies awake at night pondering the state of mobile security (half-true).
Prior to joining PCMag.com, Sara spent five years reporting for publications in New York City (Huffington Post), Hong Kong (South China Morning Post), and Singapore (Campaign Asia, Men's Health).
Follow her on Twitter at @SecurityWatch and @sarapyin, or contact her the...
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